Mistakes To Avoid When Trading Cryptocurrencies
Many people are beginning to show interest in trading cryptocurrency. Despite such a positive trend, there are many mistakes that beginner traders should. The errors that beginners make are quite common and, with imprudent actions, can cost them several thousand US dollars. If you remember the mistakes listed below, you will only have a few risks to consider when trading in cryptocurrency.
Trading on the stock exchange requires the beginners to learn about the basic indicators and trading instruments. Without knowledge of how it works, it is impossible to build a profitable trading strategy. Therefore, beginners must pay attention to the critical levels on the chart.
Beginners trading mistakes
The market of exchange trade is fraught with many risks. Experienced traders understand that there are simple rules that must be observed in order not to lose, but to increase their capital. Even the experienced traders make mistakes. Here, we will talk about some of the most common mistakes and how to avoid them.
1. Non-use of stop-loss orders
Stop-loss order is a tool that allows you to stop an order when a certain price is reached, and in this case, stops the trader’s loss. Without this option, the probability of losing your funds is very high. This does not mean that all coins need to be sold immediately after a fall: until you sell a coin, you have not recorded any losses. Some coins can recover quickly after a fall, but may not restore the old values at all.
In any case, you will turn from a trader into a long-term investor and freeze your finances for a very long time. Long-term retention of unprofitable positions is an error, which is caused by the non-use of a stop-loss.
2. The investment of all funds in one asset
This is one of the biggest mistakes. Never put all your eggs in one basket. The same is true for cryptocurrencies. Always divide your investment portfolio into different crypto-currencies. Make an investment portfolio of the most promising coins and periodically review it. At the same time, do not lose your sense of proportion. It is not necessary to conduct excessively active trade in a large number of positions.
3. Panic and buying at the peak
When a coin falls dramatically in price, most new traders will start selling immediately to stop large losses. This is used by more experienced colleagues, buying up the asset at its bottoms, and the price again increases. Now the beginner, seeing the growth, again buys a coin, but is already more expensive.
At the same time, he forgets that when buying a coin at the peak, the probability of its reduction is very high, especially if growth is caused by pampas. For example, for bitcoin, temporary falls are a normal background. Do not give in to emotions, be patient and judicious. Do not sell the coin at the next jump.
4. Ignoring the news background
Cryptocurrency does not affect the long-term state of the coin more than the news. Always keep an eye on the information about your coins. Both positive and negative news is important. Analyze the information received and try to foresee how asset owners or potential investors will react to the news. Your ability to predict the actions of traders and potential investors will determine your success with cryptocurrency trading.
5. Lack of a trading plan
For trading, you need an action plan. You need to know when to open positions and when to close, what percentage you want to earn and correctly estimate the amount you are willing to risk. Without a plan of action, the chance of losing money on a deposit is very high. Develop an excellent plan and try to follow it as much as possible.
6. Excessive expectations
When newcomers start trading, they always think that it is very easy to make much money on cryptocurrency trading. Time and perseverance are necessary to achieve success with the crypto-currency transactions. Cryptocurrency trading is a succession of successes and failures. Experience will help you reduce losses to a minimum and successful transactions to the maximum.
Never blame others for your mistakes. All decisions on transactions are to be made by you. If you listen to Telegram’s advice and make a bad transaction – blame only yourself. Do not trust different advice from strangers. All those who know the accurate information will not spread it.
The same applies to paid signals, it is, in the overwhelming majority, only assumptions based on a news background, and blindly trading on them is unreasonable. Always check incoming information and do not blame others for your loss.
8. Trading on Several Currencies Simultaneously
With the abundance of different cryptocurrencies available for buying and selling on popular exchanges, investing in various types of assets is a good idea. At the same time, trading several cryptocurrencies at once has its risks, which may have a negative impact on their holder’s portfolio.
The best option at the initial stage will be trading one or two crypto-currencies, in which, you can legally and profitably earn. Together with the growing experience, further diversification of the portfolio becomes possible and trade in a larger number of crypto-currencies.
9. Negligent attitude to safety
Always include two factorial identification. It is very important to use separate secure computers and to encrypt your data. Crypto-exchange exchanges have many holes in security systems, and their elimination often takes a long time. Cases of loss of money due to careless attitude to safety are quite high. You have to take your data security very seriously.
10. Keeping a profit on the stock exchange
This has been said many times, but still worth repeating. Do not keep your profits on the stock exchange. Take everything to your purses or fiat. The exchange is not the place that you can trust the keep your funds. When trading in large amounts, it is worth considering the division of funds between different trading floors.
Melissa Crooks is Content Writer who writes for Hyperlink InfoSystem, one of the leading app development companies in New York, USA & India that holds the best team of skilled and expert app developers. She is a versatile tech writer and loves exploring the latest technology trends, entrepreneur and startup column.